- EUR/JPY is falling sharply during the European session.
- Major European equity indexes are suffering heavy losses.
- Investors remain cautious amid concerns over nationwide lockdowns.
The EUR/JPY pair came under heavy bearish pressure on Wednesday and slumped to its lowest level since mid-July at 122.20. As of writing, the pair was down 0.74% on the day at 122.22.
JPY gathers strength on safe-haven flows
Heightened fears over major European economies imposing nationwide lockdowns to limit the spread of the coronavirus continue to weigh on the sentiment. Earlier in the day, Germany reported its highest one-day increase of 14,964 in confirmed COVID-19 infections and Chancellor Angela Merkel is reportedly planning to introduce strict restriction measures.
Additionally, French President Emmanuel Macron is scheduled to deliver a statement later in the day as the country struggles to control the spread of the virus despite the nightly curfews that were put in place last week. On Tuesday, France reported 33,417 new confirmed cases with 523 fatalities and the UK reported 22,885 new infections.
The risk-averse market environment is also reflected upon the major European equity indexes. At the moment, Germany’s DAX 30 Index is down 3.3% on the day and the Euro Stoxx 50 is down 2.7%.
Meanwhile, the 10-year US Treasury bond yield is falling for the fourth straight day on Wednesday, confirming the flight to safety and providing an additional boost to the JPY. In the second half of the day, EUR/JPY could extend its slide if Wall Street’s main indexes fall sharply as suggested by the heavy losses seen in the US stock futures.
Technical levels to watch for
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